main challenges faced by multinational companies when
TRANSCRIPT
MBA
Main Challenges faced by Multinational companies when planning Human Resources in Venezuela
Tabayre Ríos Gaudens
Student Number 1712248
May 2013
Word Count: 18,431 A thesis presented to Dublin Business School and Liverpool John Moores' University in fulfillment of the requirements for the award degree of Masters of Business Administration in Business Management under the supervision of Mr. Eddie Mcconon.
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May 2013
Table of Content
Abstract ..................................................................................................................................... 4
Acknowledgment ...................................................................................................................... 5
Chapter 1: Introduction .......................................................................................................... 6
Chapter 2: Literature Review ................................................................................................. 8
2.1 The Importance of HRP as a part of the Business Strategy ............................................. 8
2.2 HRP Process..................................................................................................................... 9
2.3 HRP in MNCs ................................................................................................................ 12
2.4 Main Challenges faced by MNCs when planning HR in Venezuela ............................. 16
2.4.1: Legal restrictions.................................................................................................... 19
2.4.1.1 The Venezuelan Organic Labor and Worker‟s Law ............................................ 19
2.4.1.2: Special Bar Against Dismissal ............................................................................ 19
2.4.1.3: Exchange Control ............................................................................................... 24
2.4.2: Socio-economic factors .......................................................................................... 25
2.4.2.1: Influence of social factors in recruitment ........................................................... 25
2.4.2.2: Inflation ............................................................................................................... 27
Chapter 3: Methodology........................................................................................................ 29
3.1 Research Question ......................................................................................................... 29
3.2 Proposed Methodology .................................................................................................. 29
3.2.1: Research philosophy .............................................................................................. 30
3.2.2: Research approach ................................................................................................. 31
3.2.3: Research strategy ................................................................................................... 31
3.2.4: Research Choice .................................................................................................... 31
3.2.5: Time Horizon ......................................................................................................... 32
3.2.6: Qualitative .............................................................................................................. 33
3.2.7: Non-probability sample ......................................................................................... 33
3.2.8: Operationalization .................................................................................................. 34
3.3 Ethics.............................................................................................................................. 34
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3.4 Limitation ....................................................................................................................... 35
Chapter 4: Data Analysis and Findings ............................................................................... 37
4.1 Data collection .............................................................................................................. 37
4.2 Sample........................................................................................................................... 37
4.3 Results from interviews ................................................................................................ 37
Chapter 5: Conclusions ......................................................................................................... 48
Chapter 6: Self-reflection on own learning & peformance ................................................ 50
6.1 Introduction ................................................................................................................... 50
6.2 Personality and experience ........................................................................................... 50
6.3 Learning process ........................................................................................................... 50
6.4 Skills identified during the learning process ................................................................. 52
6.5 My learning style preference ........................................................................................ 53
6.6 How can I continue to become more effective learner ................................................. 53
6.7 Conclusions ................................................................................................................... 54
Bibliography ............................................................................................................................ 55
Appendix .................................................................................................................................. 58
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Abstract
Human Resources Planning has been in consider a key factor for the development of companies
and its success is highly reflected in the markets nowadays. Such planning may varies from
country to country and therefore, the aim of this research paper is to explore whether Human
Resources Planning can still be consider of relevance within Multinational companies in
Venezuela given the main challenges faced when planning its operations in this country.
The influence of external factors prevailing in Venezuela, such as legal restrictions and socio-
economic problems in the Human Resources Planning has been analyzed in detail through this
paper in both the academic and the field perspective. As a result, this study lead us to understand
that even though planning plays an important role for Multinational companies, the skill of
improvising and being flexible with said planning has an important role in particular
environments such as the ones currently present in Venezuela.
It is shown that due to the existence of those particular challenges, global policies and practices
should be adapted in order to fulfill the reality of this country. In addition, it was evidenced that
recruiting and retaining the right people has become a hard task in Venezuela as a consequence
of the increasing brain drain that affects the country.
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Acknowledgement This research study about the main challenges faced by Multinational Companies when planning
HR in Venezuela completes my MBA in Business Management studies at Dublin Business
School. I would like to show my gratitude to all the interviewees who were kind enough to share
their time and ideas with me during the interviews.
I want to thanks my family and friends for all the support and understanding during these twelve
weeks writing my dissertation.
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Chapter 1: Introduction
Human Resources (HR) is considered nowadays a business partner that plays an important role
within the organisations. Bahuguna, Kumari and Srivastava (2009, p.567) have stated that the:
“HR department now became more than a business function: it is a business partner, reaching out
to support lines of business”. Thus, HR department must work in partnership with other business
units to ensure the integration with other management functions. According to Anyim, Mba and Ekwoaba (2012):
"For good business performance, it is important that manpower planners become a
strategic partner with the business planners. For a long time, scholars in organizational
development (OD) have maintained that improvement in business performance is directly
tied to efficient manpower planning and closely linking the plan to strategic objectives.
However, what some practitioners do not realize is that the answer is not necessarily on
the application of the latest management principles but rather it is on the comprehensive
integration of manpower planning with business plans and strategic objectives" (Anyim,
Mba and Ekwoaba, 2012, p.61)
Making the best possible use of HR have become crucial in designing the strategy of the
organisation, and hence one of the most important priorities for managers. In particular, HR
Planning (HRP) -also known as “manpower planning”- has been understood as a vital activity
since a contemporary approach suggests that the success of the organisations depends largely on
its employees. In this respect, Gunnigle, Heraty and Morley (2006) state:
“For example, as Snell [2005] and others have argued, in the current era of increased
competition and globalization, many of the traditional sources or competitive advantage,
such as barriers to entry [e.g. monopolies], technology and access to capital, have become
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less important, with the result that HR and HR processes can emerge as key sources of
competitive advantage” (Gunnigle, Heraty and Morley, 2006, p. 44).
Notwithstanding the foregoing, in some jurisdictions believe that planning has become less
important due to the fact that we live in an uncertain environment. However, even though
planning has become more difficult nowadays, it is still important. In the particular case of
Venezuela, planning is even more challenging due to factors that are foreign and out of the
control of the management of each company. Therefore, making a good HR plan in Venezuela
implies not only analyzing the specific challenges present in this country but also how to manage
and adapt the HR global policies imposed by the head office to face those challenges.
In that line of thought, and bearing in mind how Multinational Companies (MNCs) operate under
different environments, Kapoor (2011, p.46) sustains that “Only the multinationals that will be
willing to adapt their human resource practices to the changing global labor market conditions
will be able to attract, develop and retain the right talent, and will likely succeed in the global
competition”.
Through this paper we will illustrate the main challenges faced by MNCs in Venezuela in
conducting the planning of HR, how external factors can influence the decisions and the actions
that must be taken by these companies and how is managed this situation in connection with
other countries. It is also intended to highlight the importance that HRP still represents,
especially in MNCs that operate in complex environments like Venezuela, and how it positively
influences the achievement of the organisation‟s goals, by providing a better understanding on
how said HRP helps MNCs in Venezuela to deal with mobility of employees, assigning global
tasks, managing a global workforce and adapting the strategies and plans in this special and
complex environment.
In order to illustrate the relevance of this research work, it will be explained the importance of
HRP as a part of the business strategy. Then, we will provide an explanation of the process that
must be considered when planning is carried out, how HRP is managed within MNCs to finally
address the main challenges faced by MNCs operating when planning HR in Venezuela. We
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hope this research offers an important contribution to HR students and professionals in this area
from a practical point of view, in both Venezuela and other jurisdictions that might experience
similar circumstances in its working environment.
Chapter 2: Literature Review
2.1 The importance of HRP as a part of the business strategy
A contemporary approach suggests that the success of the organisations depend largely on its
employees. This is supported by Anyim, Mba and Ekwoaba (2012, p.58) who have affirmed that
“Since the beginning of the 21st century, there has been increasing claims that the route to
competitive advantage is achieved through people”. According to this, it is possible to sustain
that the better an organisation employs its human resources the better its development will be.
HRP seeks to identify the needs of the organisation in terms of HR in order to create a plan that
ensure that organisations count with the appropriate number and qualified personnel to meet
those needs. In this regard, Batholomew (2012, p.471) sustains “The essence of manpower
planning is summed up in the aphorism that its aim is to have the right numbers of people of the
right kinds in the right places at the right time”. Thus, HRP can ensure a more accurate use of
the HR, which implies more satisfied and better trained employees. Also, hiring the correct
people or anticipate fluctuations in hiring needs can result not only in reducing cost for
organisations but also in improving their performance and reducing employee turnover. This can
be done through an effective HRP designed in connection with the strategy of the organisation.
Indeed, HRP must be linked with the corporate strategy in order to contribute in the achievement
of the goals set by the organisation. In this regard, Reidy (2011) explains:
“Human resource planning is of major importance because the organisation needs to be
prepared as far as possible for changes in its internal and external environments. HR
planning helps to prepare the organisation to deal with future staff and skill requirements
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so that it can be achieve its strategic objectives […] HR planning is an essential part of
the overall corporate strategy […] making decisions on whether to recruit or train
employees depends on organisational plans […]” (Reidy, 2011, pp. 23-24).
Based on the foregoing, linking the corporate strategy with the HRP becomes vital in order to
succeed in these difficult times. In this regard, Jackson and Schuler (1992, p. 235) said “Because
the purpose of human resource planning is to ensure that the right people are in the right place at
the right time, it must be linked with the plans of the total organization”. On the other hand, HRP in MNCs will depend on how they are globally organized. According to
Gunnigle et al. (2007):
“Previous research on MNC subsidiaries has distinguished between those that are
autonomous, those that are controlled from higher levels and those that are the source of
information and resources for other sites (cf. Gupta and Govindarajan, 2000). In the
parallel UK study, Edwards et al., (2007: 17) posit three potential scenarios regarding the
role of the HR function: An autonomous HR function […] A controlled HR function:
[…] A limited autonomy HR function” (Gunnigle et al., 2007, p. 20).
However, whatever the form of organization is, HRP should be provided in connection with the
business strategy. In this regard, Anyim, Mba and Ekwoaba (2012, p.58) has indicated that:
“there must be congruence between business plan and manpower if the organization‟s vision,
mission and objectives are to be achieved […] Integrating the manpower planning function with
business plans means aligning decisions about people with decisions about business projection”.
2.2 HRP process
As stated previously, competitive advantage can be gain through people. Thus, in order to
achieve the competitive advantage, it is required to design the HRP with the business strategy.
In conducting HRP, it is necessary to follow a process, which entails a set of steps that allow
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organisations to determine the right number of employees with the required skills according to its
goals.
A traditional approach suggests that the HRP process include four stages. In accordance with
Gunnigle, Heraty and Morley (2006):
“The planning process […] identifies four key stages in the human resource planning
process: stocktaking; forecasting; planning; and implementing […] all these stages are
interlinked and thus form a cycle whereby human resource planning affects, and is
affected by the range of human resource policy choices that the organisation has available
to it” (Gunnigle, Heraty and Morley, 2006, p. 95).
Based on the foregoing, there are basically four HRP stages: stocktaking, forecasting, planning
and implementation, which can be briefly explained as follows:
1. Stocktaking. It involves analyzing the existing situation within the organisation. It does
not implies only the evaluation of the needs of the organisation in terms of personnel and
skills but also, but also the external factors that can affect the organisation (e.g. employee
mobility, economic and legal factors, among others). In this regard, Macaleer and
Shannon (2003, p.16) state that organisations must “Understand the internal and external
factors that may affect the achievement of the objectives that will ultimately impact the
programs and services you will provide”. Stocktaking is relevant because the
organisation needs to know how many people need to be working and in what jobs to
implement organisational strategies and attain organisational objectives;
2. Forecasting. In words of Pilbeam and Corbridge (2006, p. 97) forecasting “involves the
comparison between the identified supply of labour and the quantified demand for labour
in terms of the skills and competencies needed to achieve the corporate aims”. Thus, the
aim of forecasting is to determine the number and type of employees needed in the future.
As observed, forecasting is important because without it organisations cannot asses the
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disparity between supply and demand nor how effective a HRP program is in reducing
said disparity ;
3. Formulation of the plan. Once the organisation has identified the current resources and
the staff required, it can proceed to elaborate the plan. The organisation develops action
plans based on the gathered data, analysis and available alternatives. It has been
suggested that when creating the plan some elements should be considered. In this
regard, Reidy (2011, p. 32) refers: “Beardwell and Claydon (2007, p.175) suggest
formulating plans under the following headings: resourcing […] flexibility [...] retention
[…] downsizing”.
4. Implementation. According to Gunnigle, Heraty and Morley (2006, p. 103) “On
completion of the human resources plans, the organisation operationalizes its decision
and the cycle is once again set in motion”.
Also, it is important to bear in mind that HRP is an ongoing process that must be updated
depending on several factors such as particular needs of the organisation, legal and
economic changes, among other. Reidy (2011, p.33) supports this by stating that
“organisation‟s internal and external environments need to be monitored for any signs of
change and plans need to be reviewed in light of any changes that occur in these
environments”.
For some authors, the above mentioned process seems to be limited in order to fulfill staffs
requirements since the HRP process should include other areas. In this regard, Macaleer and
Shannon (2003) state:
“The human resources planning process must consider not only specific staff needs, but
also areas such as: Services to be provided in support of the specific strategic objectives
and the cost and timing for these services. Prioritization of the strategic objectives and
identification of the specific services to support those objectives with cost/benefit
analysis” (Macaleer and Shannon, 2003, p.18).
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This approach suggest that HRP process is a set of activities that go beyond recruiting the
required staff, which can be understood as a strategy-based HRP process.
Additionally, it is important to mention that there are different models and ways of planning.
Thus, it will depend on the one specific model chosen by the organisation. As observed, HRP
involves having the right number of qualified people in the right jobs at the right time. Hence, it
is possible to sustain that having an adequate HRP process is an important tool in order to
achieve successfully the objectives of the organisation.
2.3 HRP in MNCs
The success of organisations both nationally and internationally requires planning and
anticipating possible actions and solutions in all areas, including HR. As a consequence of the
globalization, HRP is not only about analyzing and calculating the demand and supply of HR
across the organisation but also about mobility of people, management of cultural and
geographical differences and developing a global mindset among their employees.
Labor mobility (mobility of people) refers to the geographic and occupational movement of
employees while international labor mobility is the movement of employees between different
nations. There are two typical forms of international assignments: expatriation and inpatriation.
Expatiation means transferring parent country nationals from the head office to a subsidiary
while inpatriation refers to transferring host-country nationals from the foreign subsidiary to the
head office.
Normally, when the objective is empowering the capacity of local adaptation, MNCS tend to use
local talent. However, under certain circumstances, organisations choose to assign expatriates to
help the head office to understand the local conditions and control the operations of the
subsidiary. In this regard, Serafinceanu et al. (2010) say:
“Sometimes managers from the country of origin of the company are required to train the
personnel. The need for expatriated occurs when certain qualities and experiences are
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required in a certain place, when there is a significant need for integration in the
multinational company of the other divisions in the world and when the needs cannot be
met on a local level” (Serafinceanu et al., 2010, p. 323).
Thus, managing employee mobility becomes important because without the right training and
planning, employees moving to foreign countries will not be prepared to meet the challenges
present in those countries.
In that sense, it should be noted that planning becomes important in order to be productive by
taking advantage of its resources (HR), and therefore, being prepared to address the issues
related to employee mobility should be included in the company‟s strategic planning.
According to Lazarova (2006) MNCs:
“need to be aware of the local HR context in each country that hosts a subsidiary of
theirs. In turn, their HR departments need to develop and coordinate HR policies and
programs that cut across a variety of nations, each with its own historical, political, legal,
economic, social and cultural characteristics” (Lazarova, 2006, p. 36).
Notwithstanding the foregoing, it is important to mention that there are some factors
conditioning the transfer of personnel that should be carefully addressed. Serafinceanu et al.
(2010) noted that:
"The first factor conditioning the transfer of resources from the parent organization to the
daughter companies is the way they are organized, since they can be self standing
daughter companies of the parent company or can be formed by a local partnership.
Certain similarities or differences can thus occur between the way the parent- and the
daughter- company are organized, which can facilitate or impede the implementation of
human resources policies and practices specific to the parent organization at the level of
the daughter companies” (Serafinceanu et al., 2010, p.319).
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There are different modalities in which companies can run their HR activities at international
level. For example, the Perlmutter‟s model identifies four modalities, which are:
1. Ethnocentrism: parent organization has a direct control on the daughter company in the
host country;
2. Polycentrism: daughter companies are relatively independent from the parent company,
which means that policies and practices are adapted to local needs;
3. Geo-centrism: MNCs are seen as an international entity and the HR policies are
implemented to maximize global results; and
4. Region-centrism: MNCs‟ activities are carried out at the level of regions.
Identifying the model used by the MNCs is important because according to Serafinceanu et al.
(2010, p.315) it “highlights the way in which multinational companies develop and implement
human resources‟ strategies and policies at the level of daughter companies in the host
countries”.
Likewise, management of cultural and geographical differences and developing a global mindset
among their employees is a difficult task that must be planned in advanced.
Cultural training refers to the preparation of employees from several cultures to work together
while diversity training refers to the instruction of a person or a group for living in another
country (e.g. training for expatriates and their families).
In this regard, Malik and Aminu (2011, p.319) indicate that “To achieve success in global
marketplace, the challenge of all businesses regardless of their size is to understand global
corporate cultural differences and invest in human resources”. Likewise, Pucik (1996, p.2)
affirms that “To succeed in global competition requires an open and empowered organizational
climate but also a tightly focused global competitive culture”.
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Consequently, companies must be flexible aligning people management practices to cultural and
institutional norms governing the local market. For these reasons, a cross cultural training and
diversity training must be included in the HRP.
Besides, even though MNCs must adapt to local conditions, it must also keep a stable sign of
identity. Thus, the development of different HR practices (e.g. selection, rewarding, training) for
employees of different subsidiaries can generate unfairness problems between them and causes
problems of corporate image. Therefore, organisations must implement global policies and
practices, and adapt them only when is necessary according to the circumstances of a particular
jurisdiction. According to Serafinceanu et al. (2010):
“All the relationships developed at the level of a multinational company ensures both its
integration, and differentiation of its practices of human resources at the level of it
daughter companies. Essentially this is the role of international strategic management of
human resources. This is because the implemented human resources practices at the level
of daughter companies include, more or less, specific elements to the local context where
they run their activity (economic, political, cultural, social, institutional, legislative etc.
environment)” (Serafinceanu et al., 2010, p. 322).
Meanwhile, developing a global mindset is oriented to facilitate some competencies such as
flexibility and openness to experience. It also allows employees to know organisational
structure, increase networking and developing skills such as work efficiently in different
environments. In words of Pucik (1996, p.4) “having a „global HR mindset‟ implies a
recognition of benefits that can flow to the whole organization from encouraging and valuing
cultural diversity in people, not just as members of distinct cultural groups but as individuals”.
On the other hand, Bonache and Stirpe (2011) sustain:
“Multinational companies are faced with the challenge of managing a global workforce.
Success in this regard calls for careful HR planning […] dealing with mobility not only
as regards staff (expatriates, impatriates and third country nationals), but also as regards
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positions (task relocation) and know-how (transnational team training)” (Bonache and
Stirpe, 2011, p.73).
According to the abovementioned, other factors such as task relocation must be considered by
MNCs when designing the HRP. Task relocation (offshoring) refers to move jobs to other
countries (an office, a complex function, etc.) and involves seeing the world as a global labor
market. Some reasons justify Offshoring. For example, offshoring the less qualified manpower
can reduce costs substantially. Furthermore, having access to more qualified personnel brings the
benefit of having access to a superior talent that allows the organisation to gain a competitive
success. It also can improve the operating efficiency.
As observed, HRP in MNCs are challenged, especially when said MNCs operate in countries that
present uncertain environments such as the case of Venezuela.
2.4 Main Challenges faced by MNCs when planning HR in Venezuela
Venezuela is a South American country that currently faces serious political, social and
economic problems, which are constantly reflected in ever changing laws and administrative
rules imposed by the government. Therefore, planning in Venezuela becomes more difficult
every day due to its unstable and uncertain environment that highly affects the performance and
development of MNCs in many ways.
As a consequence, organisations in Venezuela must take decisions depending on those changing
factors, which might lead to the idea that long-term planning can be seen as less important
nowadays. In this sense, Armstrong (2009) stated:
“Summarizing the problem, Taylor (2008) noted that: It would seem that employers,
quite simply, prefer to wait until their view of the future environment clears sufficiently
for them to see the whole picture before committing resources in preparation for its
arrival. The perception is that the more complex and turbulent the environment, the more
important it is to wait and see before acting” (Armstrong, 2009, p. 488).
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Nevertheless, although planning is becoming more difficult especially in countries like
Venezuela, it still remains as a very important function within HR and should be taken into
consideration when designing the strategy of the organizations. In this regard, Farnham (2006)
explains that:
"manpower planning is important because it encourages employers to develop clear and
explicit links between their business and human resources plans, and to integrate the two
more effectively. It allows for better control over staffing costs and numbers employed
and it enables employers to make more informed judgment about the skills and attitude
mix in organizations" (Farnham 2006 cited in Anyim, Mba and Ekwoaba, 2012, p.57).
It is known that several internal and external factors can influence the way a business is being
conducted. In the particular case of Venezuela, it is possible to argue that planning becomes a
hard task when compared with stable countries such as United States of America or countries of
the European Union. According to Anyim, Mba and Ekwoaba (2012, p.56) "Planning has
become more complex, particularly in this present time of increasingly turbulent business
environments, which increases the tensions between the greater need for planning and the greater
difficulties of prediction".
Venezuela is a country situated at a strategic geographic location whose main source of income
is oil. Also, Venezuela had, during the 1900s, a stable legal framework that provided security for
investors. Consequently, it used to be an attractive market where many countries wanted to
invest in (especially those in the oil industry sector).
Nevertheless, Venezuela has suffered several changes from 1999 that have affected its economy
and stability, since the country experience a change in its constitution and subsequently (by
government decisions and later implementation of laws aiming to that end) entering in a new
scheme of government and economy that even when label as “social” it is not quite yet define,
presenting contradictory realities for the businesses that take place in the country. As a
consequence, doing and conducting a MNC in Venezuela has become a complex task, especially
when planning finance and HR.
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Nowadays, trying to adapt and adequate global policies imposed by the head office to the
Venezuelan reality and needs must be managed in a different way compare to other countries. In
accordance to Bent et al. (2005):
"Successful corporate management in these turbulent and competitive conditions require
from management the development and adaptation of enterprise functional strategy; fast
and consistent implementation of strategies in business plan and a high degree of
flexibility and adaptability to changing business situations (Bent et al., 2005, p. 138)".
For the anticipation of the needs of a business, a stable environment is ideal since it reduces
variables and therefore risks. In words of Anyim, Mba and Ekwoaba (2012, p.57) "The
integration of business and manpower planning is likely to be more appropriate in a stable
market place with largely passive (and static) customers, and with scope for long-term
forecasting because of the predictability of demographic change".
Planning is more difficult where the rules can be changed in any moment without having any
guarantee that the laws will be respected and the economy will not vary abruptly. A country
could be considered unstable when is liable to fall or sway its economy or its legal framework
(for diverse reasons), which can bring devastated consequences for the different aspects of the
development of its businesses (either directly over the finances or market practices, or indirectly,
through employment related conditions that can turn in the unviability of the business).
According to Thompson (1967, cited in Jackson and Schuler, p. 224). “Uncertainty can interfere
with efficient operations, so organizations typically attempt to reduce its impact; formal planning
is one common tactic used by organizations to buffer themselves from environmental
uncertainty”.
Bearing in mind all the above mentioned, even though there are several challenges (internal and
externals) faced by companies when planning HR in Venezuela, two main challenges will be
analyzed as follows: the legal and the socio-economic.
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2.4.1 Legal restrictions
In the past few years, several regulations have been enacted in Venezuela to increase employees‟
protections. The most recent is the Venezuelan Organic Labor and Worker‟s Law published in
May, 2012. Also, one of the most representative measures that have strengthened the
employee‟s protection under the Venezuelan law is precisely the so-called special bar against
dismissal, enacted first in 2002 and later extended and amended through sixteen decrees.
Likewise, a foreign currency exchange control is enacted in Venezuela since 2003. All these
regulations will be analyzed as follows.
2.4.1.1 The Venezuelan Organic Labor and Workers’ Law
According to the Venezuelan Organic Labor and Workers‟ Law, all workers, with the
exceptions of senior or upper management employees and employees hired for an indefinite
term having no more than one (1) month of service, are protected and may not be dismissed
without just cause. The unjustified dismissal of such workers is null and void unless the
dismissal has been previously authorized by the Labor Inspector‟s Office.
When the employment relationship terminates for reasons not attributable to the worker, or when
the worker is dismissed without cause and elects not to be reinstated, the worker is entitled to an
indemnity equivalent to the value of his/her seniority benefits. This kind of measure increases
enormously the labor costs for the organisations.
2.4.1.2 Special bar against dismissal
The special bar against dismissal tends to protect employees for an indefinite term. According to
this measure, employers cannot dismiss protected employees, not even by paying them additional
compensation, unless the dismissal has been previously authorized by the Labor Inspector‟s
Office. The measure has been subject to changes since it was first enacted by a Presidential
Decree a decade ago, becoming more restrictive to employers.
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Indeed, beginning in 2002 and as a part of the current Venezuelan state policy to protect
employees and regulate the labor market, the special bar against dismissal was enacted and then
extended and amended through sixteen decrees up to this date. What was initially conceived as a
short-term measure (and apply in such a form by previous governments in Venezuela) became a
permanent practice implemented by the government, allegedly to prevent the high rates of
unemployment.
The special bar against dismissal not only prohibits dismissing protected employees but also to
transfer them, or make unilateral changes in their working conditions (including salary or
benefits) that could deteriorate their employment protection. According to Roig (2011, p.1) the
bar against dismissal “Does not benefit anyone. If the best employees are not in the company, it
will become less competitive and companies will force to keep the less good employees”.
In general, medium and large size organisations are most likely to comply with the measure since
for them it is much more convenient and necessary for practical reasons since failure to comply
with this ban (as well as other imposed rules that are less aggressive for the business
environment) might lead not only to fines and proceedings against the company, but also to a
most immediate consequence which is the impediment for the issuance of permits granted by the
government, for instance, the „labor solvency certificate‟.
Indeed, companies in Venezuela are bound to obtain a „labor solvency certificate‟ issued by the
Ministry of Labor, which is required for several purposes related to the conduct of the business,
among others: (i) participate in binds and enter into agreements with the public sector (e.g. stated
owned companies); and (ii) purchase foreign currency form the Venezuelan exchange control
authorities at the official exchange rates.
Failure to comply with the bar against dismissal can cause the denial and even the revocation of
the labor solvency certificate. Furthermore, being the subject of several positions for
reinstatement may call the attention of labor inspectors who can plan unexpected visits to the
employer and impose fines, if applicable.
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But there are also severe financial consequences related to this ban, mostly with regards to the
expenses that such measure represents for the normal performance of a company, more
considering that certain organizations, due to the dynamics of its activities (and given the new
period of one month imposed by the law to activate the protection against dismissal without just
cause), tend to have a regular rotation of its personnel.
In that sense, we most highlight the communications received by the International Labor
Organization (ILO) in 2010 and 2011, where the Venezuelan Federation of Chambers and
Associations of Commerce and Production (FEDECAMARAS for its Spanish acronym),
declared that application of the special bar against dismissal could mean that employees agree to
financial compensation from their employers to avoid bringing the cases before the labor
authorities.
That is precisely what is happening in practice: employers are negotiating with employees
offering them attractive packages enticing them to agree to resign. The cost of the dismissal is
unpredictable since it would depend on the negotiation process with each employee that the
employer needs or desires to dismiss.
Dismissal of skilled employees tends to be more expensive than dismissal of less skilled
employees, since the formers would generally require more benefits in order to reach an
agreement. Although it varies from case to case and there is no clear parameter to determine
compensation and benefits, the attractive packages offered by employers trying to convince
protected employees by the bar against dismissal to sign a resignation letter, usually contain: (i)
the compensation established in the OLL for unjustified dismissal, (ii) a payment equivalent to
several month‟s wages, (iii) the amount the employee would have received for unemployment
insurance, and (iv) the extension of certain benefits, such as the company‟s health insurance. The
attorneys‟ fees are an additional expense that employers would have to consider to calculate the
cost of the total package.
Although this is an alternative for employers who under certain circumstances are forced to
dismiss employees, the big problem is not only how expensive it is to dismiss an employee, but
22
that until the agreement is reached, the real cost is unknown. Anyim, Mba and Ekwoaba (2012,
p. 60) indicate that “Employees compensation in whatever form remains a cost to the business
and affects the profitability of the organization". Consequently, even though salaries and labor
benefits represent a normal cost for the organisations, the payments made to negotiate with the
employee are costs not estimates by the companies and will affect its budget, making therefore
the projection of costs related to labor relationships very complex for the management.
According to employers‟ representatives, the extension of the special bar against dismissals
threatens the employment quality and affects the employers‟ competitiveness. As a consequence,
companies are forced to be extremely precautious when hiring personnel because the retirement
process has become difficult and the labor costs has increased substantially.
Representatives of the employers‟ organization FEDECAMARAS have affirmed that from the
beginning of the measure, companies are suffering performance deterioration where employers
cannot dismiss less efficient employees and do not hire new personnel afraid of the effects of the
measure. The Venezuelan Confederation of Industries (CONINDUSTRIA for its Spanish
acronym) also stated its concern for the loss of competitiveness that employees are suffering and
explained that expanding the range of protected employees does not help to create new jobs.
The measure causes pressure on the labor market, forcing employers to keep their employees
regardless of their work performance. According to the foregoing, this situation affects the HRP
because positions are being filled with the wrong people, and companies will have to take some
measures to solve this problem (e.g. negotiate with these employees their retirement from the
company which will increment cost or keep those employees and create new positions for them).
However, organisations generally react by diminishing the employees‟ demand on the market so
this type of measure discourages the creation of new jobs, at least in the public sector, which
depends upon an optimal management of its resources.
In contrast with the thesis that states that with the promise of job security employees are willing
to give cooperation, effort and loyalty in return, it can be argue that this security granted by the
bar against dismissal discourages employees from being more productive and efficient since they
23
know that no matter what they do, the employer will rarely obtain an authorization to dismiss
them and that if they are to leave the company, they would do it with the guarantee of a very
attractive package.
The special bar against dismissal restricts employer‟s capability to dismiss employees even when
there is just cause. Taken a step further, this measure seems to cause the adverse effect of
discouraging employers from investment and creating new employment opportunities.
This situation affects any plan made by the HR department regarding the number of employees
required in the organisation. Indeed, this special protection, in addition to the protection
provided for in the Organic Labor Worker‟s Law, tends to induce organisations to hire the
minimum required. Also, organisations would have to avoid hiring required employees because
they cannot dismiss those whose do not comply with the requirements. This brings as a
consequence that organisations must have to create double positions, which in turn, increases
costs.
Regarding this issue, a study of the Indian labor market regulation can inform what is currently
happening in Venezuela because it shows that pro-worker amendments are associated with
lowered investment, employment, productivity and output in registered manufacturing.
In deciding whether to hire a worker, employers take into account the likelihood that a firing cost
will be incurred in the future. In the Venezuelan case, the picture gets more complicated since
the employer cannot even make a real estimate of the firing, which will probably depend on the
success of a negotiation process with the employee.
Regulations restricting the possibility of employers to dismiss their employees “leads to two
opposite effects on labor market dynamics: it reduces inflows into unemployment while also
making it more difficult for jobseekers to enter employment”. In this sense, Pilbean and
Cordbridge (2009) indicate that:
24
“The level of unemployment affects labour mobility. High unemployment may make
individuals more concerned for job security and fearful of the reduction in statutory
employment protection when starting a new job. This influence job decisions and
contribute to a more static labour market” (Pilbean and Cordbridge, 2010, p. 96).
Some authors affirm that those kinds of protections against dismissals protect those who have a
job to the detriment to those who do not. In this case, employees that by the time the measure
was enacted were protected were likely to keep their jobs or at least to receive an important
compensation offered by the employer in exchange for their resignation. Meanwhile, the
unemployed probably struggled to find an employer willing to hire them due to the uncertainty
that could occur if they desire to terminate the employment relationship.
As we can observe, Venezuelan labor framework represents one of the major challenges when it
comes to HRP.
2.4.1.3 Exchange control
The Law Against Illegal Foreign Exchange Transactions which is currently in effect in
Venezuela (a regime also imposed since 2003 that has suffered several changes but that its main
purpose has been held for a decade), contains certain provisions suggesting that: (i) the mere
payment, offering or transfer and the mere receipt of foreign currency is an illegal foreign
exchange transaction punishable under the Exchange Law; and (ii) the mere offering of services
in foreign currency in Venezuela is also an offense under the Exchange Law which is punishable
with a fine equivalent to double of the Bolivar amount of the offer.
Consequently, any payment in foreign currency that might qualified as an illicit according to the
currently enforced law, would subject both the employer and the employee to the imposition of a
fine equivalent to double the amount involved in the transaction or its equivalent in Bolivars
(Venezuelan currency), and if the total amount paid in a given year exceeds US$ 20,000.00 the
employer (and/or its representatives responsible for the payment(s) particularly if the employer is
a legal entity) and the employee could, in addition to the aforementioned fine, be sentenced to
imprisonment from two to six years.
25
The above mentioned regulations make more difficult to manage the hiring of expatriates, since
the compensation of this kind of employees is normally paid in foreign currency.
As a consequence, transfer or mobility of employees becomes a difficult task in Venezuela
especially when compared to other countries of the region. In this sense, HR department must
take this into account when planning and anticipating the needs of the organisation in terms of
employees required. This is relevant, considering that there are some businesses that due to the
particular specifications and requirements of its activities require expatriate personnel.
In accordance to Serafinceanu et al.(2010):
“Expatriate managers have management functions in daughter companies, thus providing
technical, financial and management know-how transfer from the parent company to the
daughter company. Subsequently, management know-how transferred to the daughter
companies‟ level is acquired by the personnel recruited from the host country as well …”
(Serafinceanu et al., 2010, p.316).
It is also important to consider given the high rates of brain drain in Venezuela because in order
to keep said high skill personnel, compensation in foreign currency might be an upper hand
against other companies both local and international.
As a consequence, this is a key factor for the MCNs that must be included when planning HR in
Venezuela in order to be faced properly.
2.4.2 Socio-economic factors
2.4.2.1 Influence of social factors in recruitment
Recruitment is seen nowadays as an essential HR function. According to Sahoo, Dao and
Sundaray (2011):
26
“Strategic recruitment avoids the risks and costly waste of time by locating and attracting
the right potential candidates to the right job openings within an organisation and an
effective recruitment system to satisfy the needs of candidates as well as the needs of the
organisation” (Sahoo, Dao and Sundaray, 2011, p. 27) .
Notwithstanding the foregoing, recruiting the right people is not as easy as it can be in other
countries. Due to the social problems currently faced in Venezuela (e.g. high levels of
insecurity, inflation that practically nullifies the somehow competitive salaries, among others),
skilled people prefer to migrate to other countries where better conditions are present. As a
consequence, there is an enormous drain of talent in Venezuela.
According to Jackson and Schuler (1992):
“Changes in the work force are just one aspect of the environment stimulating the need
for human resource planning. The demographic changes are somewhat predictable, but
when they are considered in combination with changing technology (see Davis &
Associates, 1986) and many of the other external changes described else wherein this
issue (e.g., by Offermann & Gowing, pp.95-108), they pose significant challenges for
human resource planning and contribute to its changing status during the past two
decades”. (Jackson and Schuler, 1992, p. 224).
Organisations must be focused on having a good resourcing strategy, which will allow them not
only to find the appropriate workforce with the skills, knowledge and qualities required but to
retain them (which is another problem faced by organisations in Venezuela). According to
Armstrong (2006, p. 371) “The selection and recruitment of workers best suited to meeting the
needs of the organisation ought to form a core activity upon which most other HRM policies
geared towards development and motivation could be built”.
It is advisable that organisations take into account the resourcing strategy as a part of the HR
plan in order to avoid undesired hiring. In this regard, Sahoo, Das and Sundaray (2011, p. 27)
say “Poor selection decisions will increase training time, labor turnover, absenteeism, accidents,
industrial unrest and job dissatisfaction”.
27
2.4.2.2 Inflation
Inflation is known as the rise in prices or the fall in the value of the money. This means that
every day, people receive less money and the prices of goods and services rise every day. It is a
cyclical economic phenomena, in a globalized world inflation in not just driven by internal
economic variables but also get influenced by common economic concerns like global oil prices,
entry and exit barriers to economies, among others. The current inflation trend is cost push
inflation, which is more driven by the rise in the cost of essentials goods and services. It even
leads to rise in wages in excess of any gains in labor productivity, this leads to increase in unit
costs of production and thus further spiraling prices.
Organizations look for ways to reduce cost and reduce redundant work force as the cost of
services and managing a non-productive workforce goes up. Cost push inflation also leads to
demand for higher wages to meet the growing expenses and the companies face dual challenge
of managing external as well as internal cost push. This often leads to wage price spiral which
means increase in wages will drive cost of goods and services.
This is exactly what happens in Venezuela and as a consequence salaries are not enough to fulfill
the needs of the workers. In addition, trade unions may demand for higher wages as well as other
work benefits at times of high inflation. If the claims are accepted by the employers, it may give
rise to a wage-price spiral which might aggravate the inflation problem.
According to Xizhi and Medina (2013):
“Among the economic challenges facing Venezuela, the country with the largest oil
reserves in the world, experts say the worst is sustained high inflation. Venezuela has
registered a string of staggering inflation figures in recent years, with the number
standing above 20 percent for six consecutive years since 2008. Despite the national
government's positive forecasts for 2013, which predicts the inflation this year will
28
remain between 14 and 16 percent, experts believe that high inflation has become a
structural problem in the country and cannot be easily solved” (Xizhi and Medina, 2013,
p.1).
As it impacts in great scale the performance and costs of the company, inflation becomes very
critical for the HR team to take the right decisions on: (i) Hiring the best talent to ensure that the
value added is more than the cost; (ii) Improving productivity - Initiate ways to enhance
productivity per employee, to have better retention programs to engage the high performers; and
(iii) Review the compensation and benefits applicable.
Changes in economic scenario drive the compensation structure, since too much of market
uncertainty would mean that variable and bonus component of employees needs to be aligned to
marked realities.
Inflation affects the availability of workers and should figure into organizational and HR plans
and objectives. A broad array of government regulations affects the labor supply and therefore
HRP.
In a sum, after revising the abovementioned major challenges for HRP, it is clear that MNCs that
operate in Venezuela must consider a wide variety of government policies, regulations, and laws
that affect the labor, economic and socio-politic environment in order to achieve a successful
planning in accordance to its global goals.
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Chapter 3: Methodology
The main purpose of this research is to highlight the relevance that HRP still has within
organizations and how it positively influences the achievement of the organization‟s goals. In
this chapter we will explain the most appropriate methods of design, sample selection, data
collection and analysis used in research regarding the topic. It will also describe the ethical
considerations necessary to complete this research project.
3.1 Research Question
The research aims to gather important information about the main challenges faced nowadays by
HR planners in Venezuela due to the influence of particular issues that are present in this
country. The research question is:
What are the main challenges faced by MNCs when planning Human Resources
Planning in Venezuela?
The purpose of this question is to evaluate the main challenges faced by MNC‟s due to the
influence of legal and social-economic factors that might affect the effectiveness of the role of
HRP in MNCs that operate in Venezuela. Furthermore, the intention is to provide information
on how companies overcome these issues in order to succeed in a complex country like
Venezuela.
3.2 Proposed Methodology
The intention of this research is to analyze in depth those challenges faced by MCNs in
Venezuela and the importance that HRP has in achieving the organization‟s goals, particularly in
MNC‟s operating in Venezuela. For this reason, in conducting this research the interpretivism
and subjectivist philosophy within an inductive approach using qualitative data through
interviews (mono-method) was adopted. This paper will explain the reasons for each choice by
using the research “onion”.
30
Figure 1: The research „onion‟
Source: Saunders, Lewis and Thornhill (2009, p.108)
3.2.1 Research Philosophy: According to this model, each layer is important in the process.
This process starts with the research philosophy which, according to Saunders, Lewis and
Thornhill (2009), “relates to the development of knowledge and the nature of that knowledge
[…] The research philosophy you adopt contains important assumptions about the way in which
you view the world” (Saunders, Lewis and Thornhill, 2009, p. 107).
In conducting this research, interpretivism was adopted because it believes in understanding
human behavior rather than explaining it. Saunders, Lewis and Thornhill (2009) sustain that
interpretivism:
“advocates that it is necessary for the researcher to understand the differences between
humans in our role as social actors. This emphasizes the difference between conducting
research among people rather than objects such as trucks and computers” (Saunders,
Lewis and Thornhill, 2009, p. 1126).
31
Based on the foregoing, this philosophy is in accordance with the research conducted, providing
a better understanding of the challenges faced when planning HR, highlighting its importance.
3.2.2. Research Approach: The following layer refers to the research approach. There are two
main research approaches: inductive or deductive. The inductive approach was used because it
adapts better to the research objective and has a more flexible structure than the deductive
approach. Regarding this approach, Saunders, Lewis and Thornhill (2009) state:
“Research using induction is likely to be particularly concerned with the context in which
such events were taking place. Therefore the study of a small sample of subjects might
be more appropriate than a large number as with the deductive approach. As can be seen
in Chapter 10, researchers in this tradition are more likely to work with qualitative data
and to use a variety of methods to collect these data in order to establish different views
of phenomena” (Saunders, Lewis and Thornhill, 2009, p.126).
3.2.3 Research Strategy: The third layer is the research strategy. In conducting this research
the Grounded Theory was used. According to Saunders, Lewis and Thornhill (2009):
“A grounded theory strategy is, according to Goulding (2002), particularly helpful for
research to predict and explain behavior, the emphasis being upon developing and
building theory […] data collection starts without the formation of an initial theoretical
framework. Theory is developed from data generated by a series of observations,. These
data lead to the generation o predictions which are then tested in further observations that
may confirm, or otherwise, the predictions” (Saunders, Lewis and Thornhill, 2009, p.
149).
This strategy will be helpful in this research because it will discover by means of the interviews
(analysis of data) which are the main challenges affecting HRP in Venezuela and how they are
handled by the MNC‟s that operate in Venezuela.
3.2.4 Research Choice:
32
A mono-method selection was considered appropriate in this research. In order to answer the
research question, a HR Coordinator and two HR Managers in three MNC‟s located in
Venezuela were interviewed. In-depth interviews were conducted with participants in the
companies in order to find the qualitative data. The participants‟ experience and opinions were
very important for the research.
Regarding in-depth interviews, Boyce and Neale (2006) sustain:
“In-depth interviewing is a qualitative research technique that involves conducting
intensive individual interviews with a small number of respondents to explore their
perspectives on a particular idea, program or situation The primary advantage of in-depth
interviews is tht they provide much more detailed information that what is available
through other data collection methods, such as surveys […] They also may provide a
more relaxed atmosphere in which to collect information – people may feel more
comfortable having a conversation with you about their program as opposed to
completing a survey” (Boyce and Neale 2006), pp.2-3).
The interview format was semi-structured. There were predetermined questions with the
purpose of receiving detailed answers. Thus, the interviews were opened to additional questions
depending on the answers. The interviews were recorded.
Interviews were the appropriate tool, since a deep understanding about the main challenges faced
by MNCs when planning HR and how they are faced by them in order to succeed was required.
3.2.5 Time Horizon. Cross sectional was applied in this research because there was a restricted
time to complete the dissertation. Thus, the HRP will not be studied over a period of time.
According to Saunders, Lewis and Thornhill (2009, p. 155), cross-sectional study is “the study of
a particular phenomenon (or phenomena) at a particular time”. Therefore, the study is a
“snapshot”.
33
3.2.6 Qualitative: The choice of method is qualitative research since this type of research
enables doing investigating about HRP. According to Ponterotto (2005) Qual:
“refer to a broad class of empirical procedures designed to describe and interpret the
experiences of research participants in a context-specific setting (Denzin &
Lincoln,2000b). Qualitative findings are generally presented in everyday language and
often incorporate participants‟ own words to describe a psychological event, experience
or phenomenon (Taylor & Bogdan, 1998). More specific defining characteristics of
qualitative methods are dependent on the particular research paradigm undergirding a
chosen inquiry approach”. (Ponterotto, 2905, p. 128).
In order to answer the research question, primary data was collected through in-depth interviews
at MNCs. The purpose of this research is to explore the challenges that MCN companies
currently face regarding HRP and the way they are assumed and faced by HR planners.
Therefore, new data was collected for this purpose. However, secondary data such as articles
and research papers also provided a useful source. Information about companies where
interviews took place were collected from the organization‟s website in order to be prepared for
the interviews.
3.2.7 Non-probability Sample: Due to certain limitations such as time and budget, it was not
possible to collect data from the entire population and therefore, it was necessary for the
researcher to select a sample. The first step in sample selection was to define the population that
would be involved in the sample. In this research, HRP in MNCs located in Venezuela was
analyzed. In accordance with Sunders, Lewis and Thornhill (2009, p.233), there are different
sampling techniques which can be divided into two groups: probability and non-probability
sampling. Regarding non-probability samples, it is impossible to generalize on statistical
grounds. Non-probability sampling was used in this research.
34
An HR Coordinator and two HR Managers were interviewed in three MNCs in Venezuela in
order to understand the main challenges faced by them when planning HR and how they handled
them. The three people were chosen due to their experience in the HR field.
Convenience sampling was also useful for this research in order to understand the challenges
that exist in Venezuela in the HRP area, their influence and how they are handled in those
companies. Literature criticizes this sampling by arguing that this choice can cause “biases to
the sample, meaning that subsequent generalizations are likely to be at best flawed” (Saunders,
Lewis and Thornhill, 2009, p.241). However, this research seeks to discover the main challenges
faced by those companies when planning HR and how they handle them, and its intention is not
to generalize them in all companies.
3.2.8 Operationalization
The purpose of this part is to define variables and concepts in our research. What is meant by
certain statements and how are they measured? The operationalized variables below are based on
our interview questions which can be found in the appendix.
This dissertation is about the main challenges faced by MNCs that operate in Venezuela when
planning HR. The companies included in our research are MNCs which means that they have
operations in several countries. The interviewees were a HR Coordinator and HR Managers
working in MNCs in Venezuela. Through our interviews we asked the employees about their
education, work experience, employment status, functions within the companies, HR processes
and their opinions in the way HR plans must be conducted. By collecting “face sheet”
information, we can see what are the challenges faced when planning HR in Venezuela and
alternatives to face them.
3.3 Ethics. Bryman ad Bell (2011, p. 122) sustain that “Ethical issues arise at a variety of stages
in business and management research”.
35
The information obtained through interviews was used only for dissertation purposes and the
policies of the MNCs are being respected. Participants were initially informed in detailed about
the purpose of this research. By knowing in advance what was the information required, they
voluntarily decided to participate. In this regard Bryman and Bell (2011) state that informed
consent:
“means that prospective research participants should be given as much information as
might be needed to make an informed decision about whether or not they wish to
participate in a study. Covert observation transgresses that principle because participants
are not given the opportunity to refuse to cooperate (Bryman and Bell, 2011, p. 133).
Furthermore, the participants‟ right to privacy was respected during the entire research.
Participants had the opportunity of refusing to answer any questions that they considered
inappropriate or that they could not answer due to company policies. According to Bryman and
Bell (2011, p. 136). “the right to privacy is a tenet that many of us hold clear, and transgressions
of that right in the name of research are not regarded as acceptable”.
It was assured that participation was voluntary, that participants could withdraw at any time and
that confidentiality has always been respected. Also, particular care is taken in not revealing
confidential details of the companies, as requested by the interviewees.
3.4. Limitations: In conducting this research certain particular efforts were required. Time
management was a limitation. Indeed, combining job and personal activities in order to have the
time to contact HR employees and managers in the MNCs selected and interviewing them was a
problem.
Also, some difficulties when doing the transcripts of the interviews were faced as some of the
people interviewed only spoke Spanish and no English.
36
Besides, contacting and scheduling meetings with the HR managers was difficult since they were
busy most of the time. Also, obtaining the information required was a difficult task since in
general, HR personnel tend to protect the company‟s information.
During the research process other limitations were also encountered, such as difficulties in
finding textbooks in English since the language spoken in Venezuela is Spanish. Furthermore,
key contacts in companies (managers) were not in Venezuela most of the time.
In addition, personal bias interfered at the beginning with the process of interviews. For
example, a first contact with unknown people was a limitation when conducting the personal
interviews due to my tendency to be reserved at first sight. However, this was overcome
successfully. Besides, I tried not to influence respondents during the interviews which I always
do because of my background as a lawyer with knowledge and experience in the employment
labor law which is very much linked to HR activities. But respondents were not influenced by
me and they provided their answers freely and without any interference.
Finally, I was concerned that interpreting the data could also be a bias since lawyers tend to be
closed to new concepts and open ideas. However, I had no problem in accepting different
opinions and including them objectively as a result of the interviews.
37
Chapter 4. Data Analysis and Findings In this chapter we present the findings of the research obtained through interviews conducted
with representatives (a HR Coordinator and two HR Managers) of three different MNCs that
operate in Venezuela. Moreover, an analysis drawn from the results of the interviews is
included, which contributes to answer the research question and reach the conclusions of this this
paper.
4.1 Data collection
The research topic determined the type of data necessary for the study. There are two sources of
data, secondary and primary data. Secondary sources are data that has already been collected.
Saunders, Lewis and Thornhill (2009, p.126.) distinguish three types of secondary data used in
research; documentary, survey, and multiple sources. It is very common that researchers collect
data from a variety of sources. Primary data is when new data is collect through observations or
interviews.
Through conversation (interviews) was possible to obtain profound knowledge on a specific
field. Through the interviews we had the opportunity to know the interviewees and their point of
view. In addition, we were able to be part of the data collection process and have control over the
responses in order to collect information for this research paper.
4.2 Sample
The focus in this dissertation was MNCs. Therefore, national companies were excluded in the
study. The sample consists of a total of three HR employees with high positions within the
MNCs. The MNCs differ from each other in industry, size, and number of employees.
4.3 Results from the interviews
Brief information about the specific MNCs consulted and the analysis of the interview performed
to its representatives will be given bellow, and then the questions and answers of the interview
will be separately presented for each company (see appendix). The questions were made on an
38
open-ended approach and under a ranking order. Interviews were conducted with participants in
the MNCs to collect data and to develop understandings from patterns in the data. Each view of
the participants is unique and valuable in order to response the research question.
Conversation is important to obtain profound knowledge on a specific field. Through
conversations we had the opportunity to know the interviewees and their point of view. We also
had the opportunity to be part of the data collection process having control over the responses in
order to collect information for this research paper.
Since the purpose of this study is to explore the main challenges faced by MNCs when planning
HR in Venezuela, only relevant information towards said purposed was discussed during the
interviews.
4.3.1 Health Care Multinational Company
A HR Coordinator was interviewed in a Multinational Company of the Health Care market with
a strong presence in fifteen countries and with more than sixty years of experience. It is a multi-
specialty health care company with leading portfolios in eye care, neurosciences, medical
dermatology, medical aesthetics, obesity intervention and urologics.
This company currently employs more than eight thousands workers worldwide and their
products are sold in hundreds of countries. One of its main values is successful through the
people, whose talent brings quality to the work and commitment.
(i) Background and work experience (Questions 1, 2 and 3) Questions regarding background information were made with the purpose of being informed
about the experience of the interviewee. It was noticed that the interviewee was aware and
deeply involved with the HR processes followed by the company regardless of the short time the
interviewee has been working for this company. Knowing the background of the interviewee in
the HR field was useful since an in-depth interview was required for this study.
39
Moreover, functions developed by the HR Coordinator within the company such as direction of
the process of recruitment and selection of the personnel, its training, and the supervisory of the
compliance of policies and procedures of the company as well as the Collective Bargaining
Agreement, are relevant for this study because such experience provide us with the information
required to understand the problematic when planning HR in Venezuela.
(ii) Process of HRP (Question 11 and 12)
As a result of the interview, it was notice that this company have business partner for each area
of business. There are some global projects imposed by the head office but mainly, the company
is managed by regions. However, some decisions are taken locally due to the reality and
characteristics of Venezuela.
It was explained that planning is made regionally but must be adjusted due to special conditions
of each country. Interviewee provided us with an example, where was explained that due to
global policies, the increases of salaries due to inflation are made regionally in February, but in
the case of Venezuela they were changed to July in order to comply with the provisions of the
Collective Bargaining Agreement applicable in Venezuela for this company.
In addition, we were advised that HR processes in this company are all made at the same time
and following global formats that must be completed, keeping and ensuring the guidelines.
(iii) Main challenges faced by the company when planning HR in Venezuela
(Questions 16 and 17)
According to the interviewee, two main challenges were identified. First challenge is referred to
salary raises and inflation percentages, which in the case of Venezuela, in words of the
interviewee, has become more of a “guessing process”. Second challenge referred was that
finding the right employee required for a position has become a very complex task since the
labor regulations do not allow mistakes due to the economic consequences.
40
(iv) Facing the challenges (Question 18)
Having in mind the challenges exposed by the interviewee, it was said that this company has to
take positions that perhaps differ from those that they had originally planned, leading them to not
hiring more people in the team and change employees benefits policies which affect the sales and
prices of their products.
The interviewee explained that even though planning is made on annual basis, in the particular
case of Venezuela, plans have to be reviewed at least twice a year or when is needed it.
Also, it was said during the interview that recruitment in Venezuela is “unique”. This company
only hire when is absolutely necessary (e.g. fill vacancies) and all the hiring is made with “legal
assistance in order to draft documents that protect the company as much as possible”.
(v) Relevance of HRP in Venezuela (Questions 21 and 22)
The interviewee commented that Venezuela is a particular case that needs special attention since
things change every day as a consequence of political decisions. For the interviewee, Venezuela
is the most difficult country to be managed since it is “complicated not just to estimate the
number of employees need it but to find the right people”.
The interviewee referred to the “employees‟ protection” in force in Venezuela, explaining that
some positions “are occupied by the wrong people and it is really hard to take them out in order
to hire new employees”.
Notwithstanding the foregoing, interviewee thinks that not planning HR would add more
uncertainty to this already uncertain country. Thus, it is consider that planning is still important
although updating and adapting will be required.
4.3.2 Mass Consumption Multinational Company
41
This is the second biggest global food and beverage company present worldwide. It currently
employs more than seventy thousand workers worldwide and their products are sold everywhere.
(i) Background and work experience (Questions 1 and 2) The questions were intended to collect background information about the interviewee. It was
notice that the respondent has a very good experience within the HR field with nine years of
experience (working in different companies of diverse markets). The interviewee had a really
good knowledge of processes followed by the company when conducting HR. Understanding the
background of the respondent was helpful because an in-depth interview was being conducted.
Furthermore, being responsible for different sub systems of HR such as personnel administration,
its recruitment, union management and budget administration provided us with a better
understanding of the HR process in this successful Mass Consumption company.
(ii) Process of HRP (Questions 8, 10 and 11)
According to the respondent, planning process in this company is made on annual basis and is
adjusted when is required. It was said that as part of their HR process, they evaluate the
personnel required, estimate the labor cost (having in mind the competitors in order to compare
the compensation package's offered to the company's employees), set training plans, among
others.
The interviewee explained that political and social environment in Venezuela makes planning
different from other countries where this company operates. He also stated that HR planning has
to be made according to the Venezuelan labor regulations since they are very strict and non-
compliance with legal framework may bring devastating consequences for the company (even
criminal penalties).
(iii) Main challenges faced by the company when planning HR in Venezuela
(Questions 16 and 17)
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In the participant‟s opinion, the main challenges faced by the company are those referred to the
Venezuelan political and social environment, and the labor anarchy as a consequence of
extremely protectionist labor legislation and inflation.
According to the interviewee, those factors affect significantly the HRP since it is conducted in
accordance with the labor legislation. Indeed, as a consequence of those external factors,
additional costs for the company are generated. In effect, due to the special bar against
dismissal, an authorization from the Labor Inspector's Office is required to dismiss employees,
which in practice is almost impossible to get because it takes a lot of time. Instead, she informed
that companies rather to pay high amounts to negotiate the retirement of those not wanted
employees
Additionally, inflation rate was considered by the participant as a main challenge. It is known
that Venezuela has the highest inflation in Latin America and is one of the highest in the world.
Consequently, high inflation affects HRP since salaries must be adjusted constantly as a measure
to retain the desired employees.
In the interviewee‟s opinion, is difficult not only to find the right people in Venezuela but also to
retain talent due to a high rate of brain drain. Therefore, compensation packages are really
expensive.
(iv) Facing the challenges (Questions 18 and 19)
Interviewee explained that planning in this company is based on objectives and an annual
budget. Thus, objectives are set in order to understand the requirements of the company, and then
budgets are prepared to make an accurate resources administration's plan. Labor cost (salaries
and labor benefits) are estimated considering compensation packages offered by the competitors
and training plans are prepared. Finally, we were informed that this company is always aware of
the labor regulations in order to comply with them accurately.
(v) Relevance of HRP in Venezuela (Questions 22 and 23)
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The participant considers that HRP is important in Venezuela even though plans may suffer
changes or adjustments during the time. It was explained that planning is needed to understand
“where are we going and the path to be followed”. In interviewee‟s opinion, good planning will
help to identify the objectives of the company, the obstacles to be faced and the action plan (or
ways) to achieve the company‟s goals.
4.3.3 Cosmetic Multinational Company
A HR Manager was interviewed in a Cosmetic Multinational Company. This Multinational
Company has forty years of experience in the manufacturing and sale of beauty products. It is
the ninth largest beauty direct selling company in America, the tenth largest beauty company in
America and the third largest beauty company in South America.
(i) Background and work experience (Questions 1, 2 and 3) These questions were directed to be informed about the background of the interviewee. The vast
experience of the interviewee in this area is extremely valuable for this research study. Indeed,
this Manager has twenty two years of experience in the different sub systems of HR such as
Human and Talent Management, Selection, Compensation and Benefits, Training and
Development, Welfare and Corporate Communications. Having many responsibilities within
this company such as planning, coordinating, managing and controlling the implementation and
execution of the plans and policies of HR, revealed us how the HR process is managed within
this company and its particularities in the case of Venezuela. Understanding the background of
the respondent was helpful because an in-depth interview was being conducted.
(ii) Process of HRP (Questions 7, 8, 9 and 10)
During the interview it was widely explained how the HR process is performed in this company.
The interviewee explained that HRP is a standardized process and applies for each country under
the same methodology. Nevertheless, HR process can be adjusted depending on the
particularities of the country (especially those referred to compliance of labor regulations).
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The process followed by the company can be summarized as follows:
a) The Business plan established for each country is known.
b) Medium and long term challenges of the business and how they impact in the designing
of the Talent Strategy are analyzed. The short term challenges of the business are
identified with the objectives of the Performance Management System of each Vice
Presidency or the General Management,
c) Then strategies and actions (such as performance, capabilities, culture and structure) that
may help in the achievement of the objectives are aligned.
d) Finally, the “talent inventory” which is the main output to design the talent strategy that
allows the business to achieve the results is made. The analysis will consider the
following: (i) Identifying the gaps regarding talent, capabilities, culture and structure to
achieve the goals of the business; and (ii) Defining specific actions to fill in the talent
gaps.
(iii) Main challenges faced by the company when planning HR in Venezuela
(Questions 13 and 14)
In the interviewee‟s opinion, the main challenges faced by this company when planning HR in
Venezuela are the following: (a) Recruiting talent that meets the profiles required to strategic
positions within the company. We were informed that they have several problems to attract the
desired profiles along with the combination of talent with values, especially in the Operations
Plant located outside Caracas (capital of Venezuela); and (b) Retaining talent and deal with a
strict Labor legislation with a special bar against dismissal that makes more difficult to have the
right rotation.
(iv) Facing the challenges (Questions 15 and 18)
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The Manager interviewed told us that it is hard to generate the desired rotations with so little
possibility of justified retirements. They are forced to deal with an annual Budget that must be
monitor constantly due to the high cost of the termination benefits payments.
According to the requirements established for the year in terms of talent planning, they set the
priorities and perform searches at different levels. When allowed the company relies on certain
cases involving contracts for a stated period of time. The company eliminated the possibility of
hiring third parties in order to comply with the new labor regulations on this matter.
Consequently, the company had to assume more costs associate with the activities performed by
third parties and include the profiles required to fill in those activities.
Regarding the brain drain faced in Venezuela, the company offers attractive compensation
packages (by comparing compensation packages and also evaluates the inflation) with the
purpose of attracting and retaining the right people to fulfill the key position within the company.
It was indicated that normally, key people are working for the competition so the company
makes efforts to offer not only an excellent compensation package but also a challenging career
path. If the correct people are not found nationally then the position must be cover by an
expatriate but in said case, previous consulting with the head office is required (respecting the
limits to hire foreign people in accordance with the Venezuelan labor law).
(v) Relevance of HRP in Venezuela (Question 19)
The interviewee considers that HRP in Venezuela is still important. However, due to the
political and social scheme present in this country, HR planners have been forced to be creative,
adaptive to change, to look for alternatives, to always be prepared.
According to the participant, Venezuela is constantly changing so HRP should always be aimed
at meeting the needs of business, but always in the hands of adaptability, budget and creativity of
the people who carry this area. It is necessary to have legal assistance in order to find the best
options to cope with the challenges of new laws, raise of salaries and special protection against
46
dismissal of employees. Under said conditions planning is hard but it is possible given that you
handle a high level of tolerance towards changes.
4.3 Analysis of Interviews
Participants were chosen because of their experience in the HR field (a HR Coordinator and two
HR Managers), and it can be affirm that they demonstrated a deep knowledge and understanding
of the HR process during the interviews. Several elements were analyzed while the interviews
were conducted, such as: self confidence, attitude, gestures and other aspects such as whether
they were logical and pragmatic people. All those factors lead us to conclude that, towards the
planning process, the interviewees not only analyze the problems that are presented to their
respective company, but also work on their solution with the input of different levels of
management, which provided us with the big picture of the problem faced in the HR field by
MCNs operating in Venezuela.
Through the interviews, it was possible for us to understand the main challenges faced by
companies when planning HR in this country. Even though there are many challenges, and
bearing in mind that personnel interviewed works in MNCs that operate in different
sector/industries, we observed a common denominator in their responses. External factors such
as social, political, economic and legal changes currently present in Venezuela have a strong
influence on the way the business is conducted and therefore, in the way its HR planning has to
be made.
As expected, we found that some factors have more influence than other in the planning process
depending on the company‟s main business activities. For example, depending on the sector or
industry where the company operates, benefits provided for in the Collective Bargaining
Agreement of that sector or industry must be applied mandatorily. Thus, worker's benefits must
be adjusted which implies that benefits granted in other jurisdictions, or even other industries,
will be different. Furthermore, how profitable the company is will allow it to face high labor
costs (due to the inflation and extra payments that must be done in order to negotiate retirements
when required).
47
On the other hand, smaller companies will faced these issues differently and consequently the
planning will be different as well. Moreover, we learned that global policies must be adapted to
the particular needs of the country. However, how easy or difficult the adaption will be relies on
how flexible or strict these global policies are.
As a result of the interviews conducted, we conclude that PESTEL framework, which is a
common tool used by companies to understand external factors that might affect or influence the
business, becomes a more relevant tool in MNCs that operate in Venezuela than in other
countries. Indeed, although PESTEL is one of the tool frequently used by companies
everywhere, it seems that in Venezuela is essential due to the external factor widely explained
during this research paper.
The interview process was highly enlightening since it provided us with the knowledge required
to answer the research question.
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Chapter 5. Conclusions
The primal object of this research paper is to explore the main challenges faced by MNCs when
planning HR in Venezuela and evaluate whether HRP can still be consider of relevance within
MNCs in this country.
Since the purpose of HRP is to ensure that the right people are in the right place at the right time,
a strategy must be prepared and linked with the plans of the total organization. The planning
process is necessarily bound to the particular needs and main strategies of the company, thus, it
can be said that planning is the product of the interaction between line management and the
planners.
Nowadays, HR planners have a strong influence in the conduction of the business and new
responsibilities and challenges must be faced. Contemporary HRP involves forecasting the
companies' future, HR needs and planning for how those needs will be met. It includes
establishing objectives as well as developing and implementing programs to ensure that right
people with the right skills works for the company, when and where they are needed.
In order to do so, HRP should involve the development and implementation of programs to
improve employee performance and increase motivation, which will be valuable for the
company. Likewise, HRP should include gathering data in order to evaluate the effectiveness of
ongoing programs and inform planners when revisions in their forecasts and programs are
needed.
During the research process and considering the results of the interviews made and the secondary
data reviewed, it is possible for us to conclude that (at least in the companies where the
interviews were conducted), external factors were the main challenges faced by MNCs when
operating in Venezuela. Indeed, those factors imply that consequently, those companies have to
deal with the strange reality that finding the required personnel is almost impossible and, that,
49
when the personnel is found, a good work of planning and management must be done in order to
keep them on their payroll.
As can be observed throughout this research paper, all the external factors mentioned are
interconnected. For example, social and economic aspects, such as high levels of insecurity and
inflation bring as a consequence the drain of talent. Additionally, legal restrictions enforced in
Venezuela (widely explained along this research paper) make personnel rotation a complex task.
Likewise, due to those legal restrictions, labor costs tend to increase enormously.
It is concluded that due to the existence of those particular challenges, global policies and
practices should be adapted in order to fulfill the reality of Venezuela. The integration of HR
issues in strategic decision-making may need to be considered as a local, rather than a global,
corporate level activity in an unstable country like Venezuela.
As a result of this study, it can be argue that in the particular case of MCNs operating in
Venezuela, organisations tend to adopt a local approach, with headquarters involvement in many
cases limited to monitoring the financial implications of HR decisions. Indeed, as referred
above, local environment may demand adherence to specific laws, regulations and customs, and
it should be noted that such factors usually require the adaptation of global HR policies to the
particular local situation.
Based on the abovementioned findings, we can affirm that even though planning plays an
important role for MNCs, the skill of improvising and being flexible with said planning has an
important role in particular environments lacking certainty, such as the ones currently present in
Venezuela. Indeed, in order to be capable to adapt to the continuous changes on said external
factors, HR Management must establish priorities to help achieve business goals and measuring,
monitoring and reporting on progress. All these planning measures are paramount since, has we
have shown through the experiences revised in the present paper, keeping the HR personnel of a
MCN with qualified employees in place to carry out its functions under complex jurisdictions as
Venezuela can sometimes be challenging but is necessary to ensure business continuity. In
50
conclusion, increasing environmental instability, have changed the needs for and the essence of
HRP within MNCs.
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Chapter 6. Self-Reflection on own learning & performance 6.1 Introduction
In this section a personal reflection will done regarding the development as student and
professional during the MBA program. In doing this, a reference to my personality and
experience as a student (and also as a professional) will be include to finally addressing the skills
acquired during the learning process. Lastly, there will be a reference regarding the professional
future and plan.
6.2 Personality and experience
Personality has a significant influence in the way people assume learning and responsibilities.
Besides, personal and professional experience helps people to shape the personality. I consider
myself as a very realistic person with good skills to organize and supervise other people. My
experience as a professional has helped me to identify more easily the problems and facing
changes in a fast way which is good for me considering the country where I live (Venezuela).
6.3 Learning process From the beginning I started the process of learning through planning. During the second
semester I worked on the dissertation proposal which started with the identification of the
research topic and objectives. Choosing the research topic was really important to me since I
knew I had to return to my country once I finished the exams. Therefore, I needed to look for an
interesting topic that I can handle and research in Venezuela.
Later, I started looking for the sources of the primary and secondary research and planning how
to manage job responsibilities while working with the research. Once the supervisor was
appointed by DBS, I took in consideration his advices specifically regarding the topic and the
research questions since he suggested that the topic was too broad. Then, I decided to change the
approach of the research without changing its essence since I it was my wish to write it on HR.
Having planned the work, I started writing the dissertation.
52
The self-reflection during the dissertation helped me to think and analyzed deeply about the
research topic which motivated me as a professional since it is my wish to start working in the
HR field which is linked to my career as a lawyer, since I have been working as a specialist in
the Labor Law field for many years. This process allowed me to understand where I was when I
started the MBA program and what I have learnt during the MBA as well as recognizing the
skills developed which will help me in my career path.
6.4 Skills identified and acquired during the learning process I developed several skills during the MBA such as oral presentation, time management,
discipline and teamwork due to the assignments required in each subject. In addition, during the
dissertation process I improved others skills. For example, as a legal advisor I normally had to
interview and interrogate people. However, the type of interview required to obtain information
for the dissertation was a new experience for me. Now, I am more polite when interviewing
someone since I understood that this is the way to do it in order to get the responses from the
people. Creating the rigth environment allowed me to connect easily with the interviwees so they
did not feel pressure during the sessions. I learnt this tool during the research metodology class
during the second semester of the MBA at DBS. Also, I have improved my analytical skills
since the research topic is different from what I normally do as a legal advisor. Indeed, a Master
in Business is a new world to me since I have been working as a lawyer since I finished my legal
studies at College (ten years). This helped me to be more discipline in order to understand and
comply with the assignments and analyze subject in depth.
This experience has allowed me to gain more confidence as a professional since now I am aware
of my skills which definitely will help in my career path. Besides, I have acquired a deep
knowledge in the Business field which I hope help me to develop my career toward this field.
The skills learnt and developed during the MBA program will complement me as professional.
Indeed, knowledge and skills in business will lead me to be an integral professional because it
will be good to combine legal and business knowledge. I hope that this combination allow me in
the future to get a good job in the HR field where I will put into practice both legal and business
knowledge.
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In accordance with Honey & Mumford (1992) “the four stages of learning; experiencing,
reviewing, concluding and planning are mutually supportive and no one stage is fully effective as
a learning procedure on its own”. Identifying the learning stages allowed me to determine the
preferences for learning. Besides, it helped me to know in which part of the learning cycle I was
weak and therefore, where develop was needed in order to become a more effective learner.
6.5 My learning style preference
There are four learning styles are Activists, Reflectors, Theorists and Pragmatists. After analyzed
the learning styles I consider myself as a Theorist. I am a very logical person who analyzes step-
by-step approaches. I am also a perfectionist (perfectionism in some cases can lead to be
inefficient, so I have to take care of this). Besides, it is normal for me to ask: Does it make
sense?
The main reason to study the MBA was to gain knowledge in the business field and experiment a
new culture surrounded by professionals from all over the world. I was sure that this experience
would provide me with a great experience not only as a professional but also as a person.
Because of this I am now an integral professional, since I was able to identify my weaknesses
(and now I can improve them) and understood the importance of being more discipline and
proactive in order to achieve my goals. Reflecting about the learning process of the MBA, I
realized that I became more confident as the course progressed, defending my points of view
strongly and being more participative during class. As a professional, I used to be in a comfort
zone since I have been working as a legal advisor for more than ten years. However, studying
the MBA helped me to become more activist, open-minded in favor of brainstorming (where I
was an active participant) and team problem-solving. Also, it helped me to understand not only
different ways of thinking but also to respect them and considering.
6.6 How can I continue to become a more effective learner? The self-reflection helps not only to be aware of current skills but to identify areas to be
developed during the professional career. From my point of view, I need to be a better observer,
improve as a listener and evaluate more in depth before take decisions. Thus, I will concentrate
on this because this is an area which needs further development. In order to improve those
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weaknesses I will pay more attention to people‟s advices and opinions, and I will have to
develop the patience since I normally take decisions hurriedly.
6.7 Conclusions
As a result of my self-reflection process I identified not only my weaknesses as a professional
but the skills developed during the MBA. The foregoing will help me to improve those areas
that need attention (such as become a good listener) and be aware of my skills (teamwork).
The self-reflection benefits me because I was not aware of any of the abovementioned issues.
From now on, I will be always paying attention to my performance in order to determine the
areas where I need to work on in order develop the attributes required to achieve my professional
goals. I understood how helpful the self-evaluation is. Before, I was not open to constructive
criticism; now, I listen, evaluate and taking into account the advices. Facing obstacles during the
MBA program such a language, lack of knowledge in the business field and deal with a different
culture made me a mature person.
There are many issues that need to be solved. However, as a result of this experience I am aware
of that and I count on with the appropriate tools to identify the weaknesses and work on them.
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Appendix: One to One Interview Questions and Responses Received
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Interview transcript
Interview 1
Interviewer: Tabayre Ríos Gaudens (Student) Interviewee: Human Resources (HR) Coordinator at Health Care Multinational Company. Interview Setting: Conducted in the office of HR Coordinator at 2:00 p.m. on April 2, 2013. Affiliation with Interviewee: Commercial Relationship (the interviewee is a representative of a client of the Law Firm where the interviewer works). 1. Interviewer: Can you please tell us how long have you been working in HR? Interviewee: I have almost 8 years working in HR. 2. Interviewer: For how long have you been working in your current position in this company? Interviewee: I have 2 years and 3 months working for this company as a HR Coordinator. 3. Interviewer: Could you please describe us the functions of your position? Interviewee: A HR Coordinator has many tasks and goals to fulfill. Among the main managing activities of my position, I have to direct the process of recruitment and selection of the personnel, its training, and the supervisory of the compliance of policies and procedures of the company as well as the Collective Bargaining Agreement where applicable. Also, I collaborate with the Human Resources Planning (HRP) for the branches operative in the region. 4. Interviewer: In how many countries does this company operate? Interviewee: Well, this company has presence in fifteen countries.
5. Interviewer: How is this company organized globally? Interviewee: It is organized by regions. 6. Interviewer: Can you please explain the structure of the HR Department of this company? Interviewee: It is pyramidal structure, starting with the Vice President (VP) in HR, then we have a Director, followed by the HR Coordinator (my current position) and finally we have analysts. 7. Interviewer: Globally speaking, does the company maintain the same structure and positions or does it change depending on the characteristics of each country? Interviewee: We have the same positions, but we have the Executive Vice President (EVP) which is only one and is the head office. 8. Interviewer: Would you please inform us about the HR Department interaction with other business units or areas? Interviewee: We have business partner for each area of business. That business partner is regional but locally we have the coordinator who manages the local themes.
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9. Interviewer: The decisions taken by the HR Department in your location are autonomous? Or do they depend on other business units? or are they imposed directly by the head office? Interviewee: It depends on which kind of decision is going to be taken. There are decisions that are taken locally, because the reality and characteristics of the country requires doing so. In this case, it is allowed to take decisions locally. There are decisions that are taken regionally, and are accepted and applied locally. And finally, there are some global projects imposed by the head office. 10. Interviewer: Consequently, could you give us some examples of decisions taken locally, regionally and globally? Interviewee: Sure. Locally, salaries rise because depend on Collective Bargaining Agreement. Regionally, recruitment process. Globally, corporate decisions. 11. Interviewer: Does the process of the HRP is standardized in all the countries where the company operates? Or is it adapted to each country depending on particular needs? Interviewee: The planning is made regionally. However, if this planning must be adjusted due to special conditions of each country, an analysis is made and therefore, the corresponding adjustments take place. For example, due to global policies, the increases of salaries due to inflation are made regionally in February, but in the case of Venezuela they were changed to July which is the month provided for in the Collective Bargaining Agreement that regulates the legal conditions of the company‟s employees. 12. Interviewer: May you please further indicate us the process of HRP in this company, and specifically in Venezuela? Interviewee: The planning is made annually at the regional level and then said plans are distributed and discussed to the countries and the corresponding adjustments are made, only when is strictly necessary. In the case of Venezuela, planning is subject to the Collective Bargaining Agreement. 13. Interviewer: According to your knowledge, does the HRP performed by the management in Venezuela differ from other countries? Interviewee: Yes, it is different. For example, as I previously told you, the specific case of the raise of the salaries is made in a different date. 14. Interviewer: Would you please explain how are expatriates personnel managed in this company? Please specify any global policy for expatriates. Interviewee: We do not manage expatriates. 15. Interviewer: Does the company apply global policies or strategies in the HRP? If so, please explain them to us. Interviewee: Processes are all made at the same time and following the same formats that must be completed, keeping and ensuring the guidelines. The format is Global, because it have to be approved by the Region and then by the Headquater.
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16. Interviewer: Based in your experience, which are the main challenges faced by the company when planning HR in Venezuela? Interviewee: In our case the main challenges are presented by the issue of salary raises and inflation percentages, which do not follow a parameter country but that, in the case of Venezuela, has become more of a guessing process. Also, trying to find the correct employee for a position has become a nightmare since the labor regulations do not allow us to make mistakes because it can be very expensive for us. 17. Interviewer: In your opinion, how external factors affect or influence the HRP in Venezuela? Interviewee: External factors have made us take positions that perhaps differ from those that we had originally planned, leading us to for example not hiring more people in the team, change employees benefits policies, changes in the sale and prices of our products. 18. Interviewer: How does the company locally perform the search, selection and recruitment of personnel? For example, which parameters does the company follows when hiring staff, taking into account that in Venezuela there is a regime imposed by the government in order to ensure absolute job security and stability, and that currently it is not possible to hire staff through intermediary firms. Do they differ from those parameters used in other countries? Interviewee: Recruitment in Venezuela is unique; completely different from the other countries in the region. We hire only when absolutely necessary, for example to fill vacancies. All the hiring is made with legal assistance in order to draft documents that protect the company as much as possible. 19. Interviewer: How does the company perform the HRP taking into account the external factors faced by the country? Interviewee: The planning is made on annual basis. However, in the particular case of Venezuela, we have to review the plan at least twice a year or when is needed it. 20. Interviewer: Does the company transfer local employees to companies in other jurisdictions or vice versa? If so, how is it planned? Interviewee: Is not common in the company. When high skilled employees are required, they are transfer to work on said specifics projects. 21. Interviewer: Do you consider that planning is still important even though we live in a country with economic, politics, social changes? Please explain your answer. Interviewee: Based on my experience I think is still important. We already live with enough uncertainty to add another one. Planning is necessary even though we have to update and adapt it. 22. Interviewer: Do you wish to add any comment, idea or suggestion? Interviewee: Venezuela is a special case that we have to manage really carefully. Things change every day depending on political decisions that affect the normal way of business. I am in charge of 5 countries of the region (South America and Mexico), and I have to say that Venezuela is the most difficult to manage. It is complicated not just to estimate the number of employees need it but to find the right people. Besides, since almost all the employees are
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protected, some positions are occupied by the wrong people and it is really hard to take them out in order to hire new employees. Interviewer: Many thanks for your time and cooperation during this interview. Interviewee: You are welcome.
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Interview transcript
Interview 2
Interviewer: Tabayre Ríos Gaudens (Student) Interviewee: Human Resources (HR) Manager at Mass Consumption Multinational Company. Interview Setting: Conducted in the office of HR Manager at 2:00 p.m. on April 9, 2013. Affiliation with Interviewee: Commercial Relationship (the interviewee is a representative of a client of the Law Firm where the Interviewer works). 1. Interviewer: Can you please tell us how long have you been working in HR? Interviewee: My experience in HR is around 9 years in different companies and/or sectors, (such as massive consumption, automotive and manufactures). 2. Interviewer: For how long have you been working in this company? Interviewee: I have been working for this company 4 years and 6 months. 3. Interviewer: Could you please describe us the functions of your position? Interviewee: I am responsible for different sub systems of HR (Personnel administration, its recruitment, union management, budget administration) specifically in the sales area of this mass multinational consumption company. 4. Interviewer: In how many countries does this company operate? Interviewee: This company has presence worldwide. It is the second biggest company in the food sector worldwide.
5. Interviewer: How is this company organized globally? Interviewee: It is organized by regions. 6. Interviewer: Can you please explain the structure of the HR Department of this company? Interviewee: This department is composed by a HR Director and four Regional Managers (benefits and compensation, recruitment, training and National HR). Also, there are three HR Managers that support respectively one operation (respectively Plant 1/ Plant 2/ Sales). These three Managers work with a team of coordinators, specialists and analysts in accordance with the number of employees that render services for the company. 7. Interviewer: Globally speaking, does the company maintain the same positions or do they change depending on the characteristics of each country? Interviewee: They change according to the specific characteristics and dynamic of each country. 8. Interviewer: Would you please inform us about the HR Department interaction with other business units or areas? Interviewee: The HR department is related to the different business units since they work with staff, and it is our responsibility to ensure the excellent management of said staff, ensuring optimal conditions to develop the work.
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9. Interviewer: The decisions taken by the HR Department in your location are autonomous? Or do they depend on other business units? or are they imposed directly by the head office? Interviewee: There is a mix of decisions. Depending on the scope and impact on operations, the decisions will escalate. 10. Interviewer: Does the process of the HRP is standardized in all the countries where the company operates? Or is it adapted to each country depending on particular needs? Interviewee: The process must be adapted depending on particular needs of each country. 11. Interviewer: May you please further indicate us the process of HRP in this company, and specifically in Venezuela? Interviewee: The planning process is adjusted to the operations' needs and based on an annual budget. Once the company has determined the objectives, we evaluate the needs, in terms of employees require to meet the objectives then we estimate the cost (salaries), keeping in mind the market in order to understand the competitive compensation packages, training plans, among others. 12. Interviewer: According to your knowledge, does the HRP performed by the management in Venezuela differ from other countries? Interviewee: The political and social environment in Venezuela makes planning different from other countries. This planning is made in accordance with the labor regulations enforced in Venezuela, which are very strict. 13. Interviewer: From your experience, may you please indicate us if the process is similar in the companies that you have worked before? Interviewee: Yes, it is very similar. They always set the objectives in order to understand the needs of the company, and then budgets are prepared in order to make an accurate resources administration's plan. 14. Interviewer: Would you please explain how are expatriates personnel managed in this company? Please specify any global policy for expatriates. Interviewee: There is a global policy but I do not manage this information. 15. Interviewer: Does the company apply global policies or strategies in the HRP? If so, please explain them to us. Interviewee: There are global policies. However, as I explained before, in Venezuela they have to be adjusted. 16. Interviewer: Based in your experience, which are the main challenges faced by the company when planning HR in Venezuela? Interviewee: In my opinion, the main challenges are: (i) Political and social environment; (ii) Labor anarchy; (iii) Labor legislation and legal restrictions; and (iv) Inflation.
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17. Interviewer: In your opinion, how external factors affect or influence the HRP in Venezuela? Interviewee: They affect significantly because planning is made in accordance with the labor legislation. However, when those external factors are present, they generate additional costs to the company. For example, due to the special bar against dismissal, companies cannot dismiss employees without the authorization from the Labor Inspector's Office, which takes a lot of time. Therefore, companies have to negotiate the retirement of the employees which implies the payment of extra salaries, benefits and indemnities. 18. Interviewer: How does the company locally perform the search, selection and recruitment of personnel? For example, which parameters does the company follows when hiring staff, taking into account that in Venezuela there is a regime imposed by the government in order to ensure absolute job security and stability, and that currently it is not possible to hire staff through intermediary firms. Do they differ from those parameters used in other countries? Interviewee: The company has a guideline to recruit people. However, finding people in Venezuela, even though is not logical, is difficult. Also, it is difficult to retain talent due to a high rate of brain drain. Nowadays, retain talent in Venezuela is extremely difficult and therefore compensation packages are really expensive. In addition, companies not only have to develop career plans and grant competitive benefits but also they have to assume risks when hiring people since it is almost impossible to dismiss them (even though it can be justify). This situation forces the company to innovate every day to reach the objectives. 19. Interviewer: How does the company perform the HRP taking into account the external factors faced by the country? Interviewee: Planning is based on objectives and an annual budget. 20. Interviewer: Does the company transfer local employees to companies in other jurisdictions or vice versa? If so, how is it planned? Interviewee: Some of the global policies are applied but must be adjusted to the particular case of Venezuela. 21. Interviewer: Does the company transfer local employees to other countries or vice versa? How does the company plan the mobility of employees? Interviewee: Yes, we transfer local employees to other countries under the figure of "expatriates", depending on the needs and availability. 22. Interviewer: Do you consider that planning is still important even though we live in a country with economic, politics, social changes? Please explain your answer. Interviewee: Yes, it is important. Although the plan may suffer changes or adjustments during the time, planning is needed to understand where are we going and the path to be followed. 23. Interviewer: Do you wish to add any comment, idea or suggestion? Interviewee: Venezuela is a country affected by a political and social environment that has been wrongly handled. However, even when said situation affects the management of the companies,
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the good planning will allow the identification of the objectives and obstacles that must be overcome to meet the goals and find the ways to achieve them. Interviewer: Many thanks for your time and cooperation during this interview. Interviewee: Anytime!
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Interview transcript
Interview 3 Interviewer: Tabayre Ríos Gaudens (Student) Interviewee: Human Resources (HR) Manager at Cosmetic Multinational Company. Interview Setting: Conducted in the office of HR Manager at 2:00 p.m. on April 16, 2013. Affiliation with Interviewee: Commercial Relationship (the interviewee is a representative of a client of the Law Firm where the interviewer works). 1. Interviewer: Can you please tell us how long have you been working in HR? Interviewee: I have twenty two years of experience in the different sub systems of HR such as Human and Talent Management, Selection, Compensation and Benefits, Training and Development, Welfare and Corporate Communications. 2. Interviewer: For how long have you been working in this company? Interviewee: Eight years. 3. Interviewer: Could you please describe us the functions of your position? Interviewee: Planning, coordinating, managing and controlling the implementation and execution of the plans and policies of HR, with the purpose of providing and maintaining the human talent required and meet the goals established for the area, following the guidelines of the Vice President of Human Resource Management of the corporation and the Department of Operations and Administration in Venezuela. 4. Interviewer: In how many countries does this company operates? Interviewee: This company operates in Peru, Colombia, Chile, Mexico, Venezuela, Bolivia, Guatemala, Puerto Rico, Salvador, Dominican Republic, Ecuador, Costa Rica, Argentina, United States of America, Panama and Brazil. 5. Interviewer: Can you please explain the structure of the HR Department of this company? Interviewee: In Venezuela we have two HR Managing Offices. One of them support Operations and Administration areas located in the plant outside Caracas and the other support Sales Force, Market Research and Stores (retail). We have two HR Managers that report to the General Director and Operations Director respectively. The structure contemplates Head of HR, Head of Industrial Safety, HR Analysts, Supervisors of Industrial Safety and Communications Analysts. 6. Interviewer: Globally speaking, does the company maintain the same structure and positions or does it change depending on the characteristics of each country? Interviewee: Each country has the same structure except head office which structure is much more complex because the corporate guidelines come from there and they apply to all the countries. 7. Interviewer: Would you please inform us about the HR Department interaction with other business units or areas?
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Interviewee: We work as a business partner of the commercial area, sales and operations. The foregoing means, that we support in all matters relating to the strategic alignment of talent to achieve corporate goals. We work in a healthy organisational system in order to attract and retain talent. We followed the corporate goals provided for each Vice Presidency, understanding their medium and long term challenges and designing the strategy to get the right person in the right moment under the right situation. 8. Interviewer: The decisions taken by the HR Department in your location are autonomous? Or do they depend on other business units? or are they imposed directly by the head office? Interviewee: Corporate guidelines are issued by the head office and we must respect them and apply them. Those decisions that by their legal nature cannot be abided must be adjusted to the Venezuelan reality and the reasons for the change must be explained and justified. 9. Interviewer: Does the process of the HRP is standardized in all the countries where the company operates? Or is it adapted to each country depending on particular needs? Interviewee: HRP is a standardized process and applies for each country under the same methodology. However, depending on the goals, times and strategies can be adjusted, but always under the same planning model. 10. Interviewer: May you please further indicate us the process of HRP in this company, and specifically in Venezuela? Interviewee: First we focused on knowing the Business plan established for each country. We understand the medium and long term challenges of the business and how they impact in the designing of the Talent Strategy. The short term challenges of the business are identified with the objectives of the Performance Management System of each Vice Presidency or the General Management, and we align the strategies and actions (such as performance, capabilities, culture and structure) that may help in the achievement of the objectives. Then, we understand how the talent strategy impacts on the financial results of the business. Finally, we make the “talent inventory” which is the main output to design the talent strategy that allows the business to achieve the results. The analysis will consider the following: (i) Identify the gaps regarding talent, capabilities, culture and structure to achieve the goals of the business; and (ii) Define specific actions to fill in the talent gaps. 11. Interviewer: According to your knowledge, does the HRP performed by the management in Venezuela differ from other countries? Interviewee: No, is the same in all countries. We just adapt the plan when is needed it.
12. Interviewer: From your experience, would you please tell us if the process in this company is similar to the companies you worked for before? Interviewee: No, in this company is much more complete. 13. Interviewer: Based in your experience, which are the main challenges faced by the company when planning HR in Venezuela?
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Interviewee: The main challenges in my opinion are: (i) Talent recruitment that meets the profiles required to fill critical positions. In the particular case of our Plant outside Caracas, attracting the desired profiles along with the combination of talent with values has been a difficult task to accomplish; and (ii) Retaining talent and deal with a strict Labor legislation with a special bar against dismissal that makes more difficult to have the right rotation. 14. Interviewer: In your opinion, how do external factors affect or influence the HRP in Venezuela? Interviewee: It is very difficult to generate desired rotations with so little possibility of justified retirements. We are forced to deal with an annual Budget that must be monitor constantly due to the high cost of the termination benefits payments. 15. Interviewer: How does the company locally perform the search, selection and recruitment of personnel? For example, which parameters does the company follows when hiring staff, taking into account that in Venezuela there is a regime imposed by the government in order to ensure absolute job security and stability, and that currently it is not possible to hire staff through intermediary firms. Do they differ from those parameters used in other countries? Interviewee: According to the requirements established for the year in terms of talent planning, we set priorities and perform searches at different levels. When is allowed we rely on certain cases involving contracts for a stated period of time. We eliminate the possibility of hiring third parties in order to comply with the new labor regulations. This imply that we had to assume more costs associate with the activities performed by third parties and include the profiles required to fill in those activities. 16. Interviewer: Does the company transfer local employees to companies in other jurisdictions or vice versa? If so, how is it planned? Interviewee: Yes, it applies more from Venezuela to other countries than in the other way around due to the exchange control regulations in force in Venezuela as explained before. There is a comprehensive policy that recognizes every aspect of the change of location of an employee from his first exploratory visit to installation, searching for housing, car, school, and clubs, among others. 17. Interviewer: Would you please explain how are expatriates personnel managed in this company? Please specify any global policy for expatriates. Interviewee: There is a policy for expatriate. However, nowadays Venezuela is not an attractive country for employees of other countries because we do not have access to foreign currency and we are affected by long processes to obtain work permit (visas). As a consequence we do not have expatriates working in Venezuela right now. 18. Interviewer: Bearing in mind that there is a brain drain as a consequence of the legal, political and social environment in Venezuela, which implies that there is not enough national talent to fulfill some positions, and considering the fact that the country’s conditions are not attractive anymore for expatriates, would you please explain how does your company managed the current lack of working talents?
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Interviewee: This is a really good question because this is a big issue for us. In these cases we try to find employees to fill in key positions in Venezuela by offering attractive compensation packages. For this, we research the market to compare compensation packages and we also evaluate the inflation in order to offer a really attractive compensation package which allows us to recruit these people. Normally, key people are working for the competition so we try to offer not only an excellent compensation package but a challenging career path. If we do not find the correct people nationally we will need to position an expatriate but in said case, previous consulting with the head office is required (respecting the limits to hire foreign people in accordance with the labor law). 19. Interviewer: Do you consider that planning is still important even though we live in a country with economic, politics, social changes? Please explain your answer. Interviewee: Yes, it is important. However, since Venezuela has over ten years under a political scheme that has forced us to be creative, adaptive to change, to look for alternatives, we must always be prepared. In Venezuela the constant is change so HRP should always be aimed at meeting the needs of business, but always in the hands of adaptability, budget and creativity of the people who carry this area. We must work hand in hand with legal counsel in order to find the best options to cope with the challenges of new laws, raise of salaries and special protection against dismissal of employees. Under said conditions planning is hard but it is possible given that you handle a high level of tolerance towards changes. Interviewer: Many thanks for your time and cooperation during this interview. Interviewee: It was a pleasure.